Home Health + Comfort: Commercial Energy Audits Are in Demand
November 8, 2010
According to Energy Star®, energy costs have been increasing at a rate of 6 to 8 percent per year, which is why numerous building owners and operators are getting serious about making their facilities more energy efficient. This makes good business sense, as not only can they improve profitability through lowering energy costs, they can use their investment in energy efficiency as a marketing tool for prospective tenants.
This interest in energy efficiency also provides a great opportunity for commercial HVAC contractors, who are the professionals building owners and operators turn to for advice on how best to improve the biggest source of energy use - their mechanical systems. Energy audits provide a way for contractors to thoroughly evaluate existing systems and make recommendations that will ultimately lower the energy costs of a building and improve the indoor environment.
GROWING TRENDWhen customers started asking about how to save operational dollars in 2006, Thom Brazel, LEED AP, general manager, West Coast Operations, Hill York, Sarasota, Fla., and 2011 national chairman of the Mechanical Service Contractors of America (MSCA), knew it was time to start offering comprehensive energy audits. “Our company has been around since 1936, and while we have always looked at energy savings and payback for the customer, we never really defined what we did as an audit.”
Hill York offers mechanical services to a number of different types of buildings, from colleges and universities to hospitals to nursing homes to commercial office space, and most of these owners and managers have expressed a desire to save energy, noted Brazel. Given that approximately 60 percent of the typical commercial customer’s energy expenses in Central and South Florida can be directly related to air conditioning, it made sense for Hill York to start offering energy audits independently, as well as part of its maintenance agreements and retrofit programs.
“Nobody likes the word ‘audit,’ so when we talk with customers, we actually suggest performing an energy assessment to see how we can help them save energy,” said Brazel. “We usually start with the Energy Star benchmarking tool (Portfolio Manager) to give us an idea of how a building’s energy usage compares to others in the area. It is a simple tool to use, and it gives you a good overall view of the building.”
After that, Brazel may suggest placing remote sensors around the building in order to gather information on levels of temperature, humidity, CO2, and lighting. This will allow him to identify specific problem areas in the building, as well as get a feel for how the building is being operated.
“Once we identify the problems, we will hone in on them and do more of a detailed analysis based on what the data tells us,” said Brazel. “When we have all the information, we will implement a project or a solution that will give customers long-term benefits. Basically, our goal is not to sell audits. We want to find, develop, and maintain our customers for 10 or 20 years or more, and we can do that by providing the energy solutions they need to operate their facilities better.”
This approach has been successful for Hill York, as its energy solutions business is generating more income each year. Brazel noted that up until a year ago, sales of energy audits and solutions were in the 10 percent range, but now energy solutions contribute 20 to 25 percent to annual sales. “If you roll in retrofit projects - because almost every retrofit project has an energy component - we’re probably approaching 30 to 50 percent of our business. Really, every retrofit project has some energy analysis that is done, and for contractors to survive in today’s market, you have to find solutions that truly bring value to the customer.”
FENDING OFF COMPETITORSAbout 18 months ago, W.L. Gary Co., an 87-year-old mechanical contracting firm in Washington, D.C., started offering energy services in order to stave off competition. “We knew if we didn’t start helping our clients with their energy challenges that there would be other contractors who would come in and offer those services, and we would be behind the learning curve. We decided to go ahead and get into it, and we’re now starting to reap some of those benefits and get some of those opportunities with existing and new clients,” said Woody Woodall, director of business development, W.L. Gary Co.
Another reason why it made sense to start offering energy audits is that in the District of Columbia, all commercial buildings must have an Energy Star rating posted by 2012. Because of this mandate, most building owners and managers are aware of the need for energy audits and are receptive to the costs involved in performing the service.
There is no cookie-cutter approach to energy audits at W.L. Gary Co. because every customer is different. As with Brazel, Woodall usually starts the process by using Energy Star’s benchmarking tool in order to see how much energy the building is consuming. “Once we finish the benchmark, then we do an energy assessment with BuildingAdvice™, an energy analysis tool offered through AirAdvice [see sidebar]. That gives us an opportunity to provide our client with a very good, very extensive report as to the condition of their building, and where there may be some potential problems.”
After the problems are pinpointed, a plan is devised and prioritized for each customer. Most of Woodall’s customers take some kind of action based on the plan, even if it is just to address low-hanging fruit, such as making changes to the control system or installing motion sensors. “We project out what it’s going to cost to do everything. Then, we lay it out on a schedule and customers can choose what they want to do this year, then next year, and we’ll just keep going until their building is where they want it to be.”
Energy audits are also being used to prove to customers that preventive maintenance programs ultimately save them money. “When we start working with a new client, we do a benchmark and analysis upfront, and then nine months after that, we come back and do the same thing. We use it for verification that our PM programs are working, because we want to show customers that we are saving - not costing - them money. It’s a great tool to have.”
It took six months of heavily marketing energy services to existing customers before the energy audit business started picking up at W.L. Gary Co. Now the demand for energy audits and related services is high, and Woodall expects this part of the business to keep growing. “Our energy audits aren’t a huge moneymaker, but they open so many doors for retrofits and upgrades. It’s a fun and exciting time to be in this business.”
Sidebar: Training, GuidanceCommercial contractors looking to get into the energy services business may want to first consider checking out AirAdvice (www.airadvice.com), a company that offers contractors the marketing and technical tools needed in order to start improving the energy efficiency of commercial buildings.
The technical training offered by AirAdvice consists of webinars and classroom sessions that focus on the hardware (e.g., sensors) and software contractors will use to help analyze and model the energy use in a building. The sales and marketing training piece teaches contractors how to build an energy services offering that fits into their existing approach to service. In addition, AirAdvice teaches their contractors’ salespeople to have the confidence to engage customers in conversations about energy.
Getting into the energy services business is definitely something contractors should consider as it can be beneficial in three ways, said Tim Kensok, vice president of market development, AirAdvice, Portland, Ore. “The first benefit is that it protects a contractor’s existing base of service or preventive maintenance [PM] agreements. The second benefit is that it grows this base by helping contractors win new PM agreements.”
The third benefit is that offering energy services to a contractor’s base can help uncover retrofit projects during the day-to-day work of fulfilling the scope of work defined by the Energy Service Agreement™. “By bringing an energy services offering to the table, we find it is a very effective way to go that extra step and start those conversations about energy, which invariably leads to discussions on retrofit projects as well, most of which would have never happened with a more traditional approach to maintenance,” said Kensok.
For these reasons, energy services can be quite lucrative, because they include multiple sources of incremental profits. There is the profit derived from performing the energy audit itself, but more importantly there is the profit that is achieved by performing services that result from the audit. “It is really the pull-through of additional services - such as PM agreements and additional service work - that can be profitable,” said Kensok. “Then the PM agreement relationships drive additional revenue in the form of retrofit projects. The audit is really just the beginning - the door opener - to all the other sources of incremental revenue and profit.”
Publication date: 11/08/2010